A federal court Wednesday ordered two Paradise Valley residents to stop operating businesses that prosecutors said were used to funnel hundreds of millions of overseas robocalls per month.

The action by prosecutors in the Eastern District of New York claimed Tuesday that three businesses owned by Nicholas and Natasha Palumbo were used since at least 2016 for calls that often targeted vulnerable people with fraudulent Social Security and other scams.

The Palumbos and the businesses they ran out of their home – Ecommerce National LLC, TollFreeDeals.com and SipRetail.com – were named in court documents along with two companies run by Jon Kahen of Great Neck, N.Y. Prosecutors said all the companies engaged in “predatory wire fraud schemes” that targeted people throughout the U.S.

Social Security Administration Inspector General Gail Ennis said at a Senate hearing on the issue of phone fraud against seniors Wednesday that a restraining order had been issued that morning against the Palumbos, and she hoped for an order against Kahen soon.

“They’ve earned a lot of money in the process – in essence, profiting off of scam victims,” Ennis told the Senate Special Committee on Aging.

A woman identifying herself as Natasha Palumbo declined comment on the charges Wednesday. Requests for comment sent to an email identified in court documents as Nick Palumbo’s were not immediately returned.

The documents filed Tuesday in U.S. District Court for the Eastern District of New York, said the Palumbos operated telecommunications carriers that facilitated hundreds of millions of unlawful robocalls, most of which originated in India.

In one 23-day period from May to June last year, the couple’s businesses had a hand in carrying just over 720 million calls, that came from more than 133 million unique source numbers, according to court documents. More than 425 million of those calls lasted less than a second.

Of calls transferred through TollFreeDeals.com, the filing said more than 24 million of those calls were made to phones with area codes in the Eastern district of New York.

The Justice Department said in a statement that the calls often claimed to be coming from government agencies and threatened action such as arrests for tax fraud, frozen assets and deportation. In many instances, the calls falsely said the victim’s Social Security number had been compromised.

The complaint said operators of companies that channel the robocalls receive a cut of payments made by victims. It also said that the Palumbos provided toll-free phone numbers to fraudsters, allowing victims to return calls to scammers overseas.

The companies received warnings, notices, subpoenas and inquiries over the past two years about their services from law enforcement agencies, an industry trade group and telecommunications companies about complaints, according to court documents.

Every year, hundreds of millions of dollars are stolen from American consumers through such robocall scams, said Assistant Attorney General Jody H. Hunt in a statement released with the filing.

“Not only are the calls an annoyance, but for elderly and vulnerable Americans they are a serious problem – often causing devastating financial harm,” his statement said.

In 2019, there were an estimated 3 million robocalls a day to Arizona phone numbers, according to data from call-blocking company YouMail.

At the Senate hearing Wednesday, Sen. Kyrsten Sinema, D-Arizona, told of one constituent who received a dozen calls in one day from a scammer.

Sen. Martha McSally, R-Arizona, said at the hearing that there is a “special place in hell” for those who scam vulnerable people.

“Going after these companies is a first of a kind action, and I really applaud all the effort it took to get to this place,” said McSally, who said she was “disgusted” that an Arizona company has been implicated.

Hunt, with the Justice Department’s Civil Division, said its actions should be a warning to others who participate in trafficking robocalls.

“The Department of Justice will pursue to the fullest extent of the law individuals in the United States who knowingly facilitate imposter fraud calls, using both criminal and civil tools where appropriate,” his statement said.

But Ennis said this is just a first step. No matter how many investigations are conducted, or how scammers are put out of business, scammers will continue to find new ways to haunt the lines of innocent victims, she said.

“We still have a long way to go to permanently shut down these and other gateway carriers that facilitate scam calls and perhaps more importantly we need to ensure we deter others from filling that void,” Ennis said.


Story by Jessica Myers, Cronkite News